By Ambar Warrick
Investing.com-- Australian wages grew slightly more than expected in the September quarter to a 10-year high, data showed on Wednesday, as heightened labor demand and low unemployment drove up salaries in private sector firms.
Australia’s wage price index grew an annualized 3.1% in the three months to September, data from the Australian Bureau of Statistics (ABS) showed. The figure, which was the index’s highest reading since March 2012, beat expectations for growth of 3%, and was above the previous quarter’s reading of 2.6%.
The index rose 1% from the prior quarter, beating expectations of 0.9% and well above the last quarter's reading of 0.8%, which was revised a touch higher.
Wages in the private sector grew at twice the rate as those seen in the public sector, the ABS said in a media release.
The strong reading comes as Australian inflation hit an over 30-year high, necessitating the need for higher wages as the cost of living increases.
Australia’s labor market tightened substantially this year, with unemployment hovering around 50-year lows. But several private industries are facing labor shortages, necessitating the need for higher wages to retain employees.
Wednesday’s reading also gives the Reserve Bank of Australia more headroom to keep raising interest rates.
The central bank has raised interest rates by 2.75% from record lows this year, as it moves to curb a spike in inflation. But the bank had recently slowed its pace of rate hikes on fears that certain facets of the economy, particularly the labor market, could be impacted.
Still, the bank signaled that it intends to keep hiking rates.
The increase in wages comes as a positive signal for the Australian economy, and is likely to keep private consumption- a key driver of growth- upbeat this year. It is also likely expected to help perk up consumer sentiment, which is wallowing at its lowest levels since the 2020 COVID-19 pandemic.
The Australian dollar fell 0.2% after the data, but remained pinned near a one-month high.